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Last Updated: Friday, 27 January 2006, 16:41 GMT
Davos grapples with Hamas fallout
By Tim Weber
Business editor, BBC News website, in Davos

Hamas supporter
Hamas' sweeping victory was a surprise

The victory of the Islamic militant group Hamas in the Palestinian elections has become one of the hottest topics at the World Economic Forum in Davos.

World leaders meeting in the Swiss mountain resort were stunned on Thursday by the news of the election outcome.

But even though opinions on the Middle East conflict are sharply divided among participants, some consensus is beginning to emerge.

  • Israel and the United States have to accept the outcome of the elections, and
  • Hamas must change and talk to Israel to negotiate a peace settlement.

On Thursday, US Secretary of State Condoleezza Rice, speaking via a satellite link from Washington, had told the business people and world leaders in Davos that Hamas could not "have one foot in politics and the other in terror".

Both Israel and the US government have ruled out negotiations with Hamas for now.

Amr Mousa, the secretary general of the Arab League, argued that the United States could not promote democracy, but then go on to reject the results of democracy.

"The question is: what can Hamas do and what can [the Arab community] do?" he asked.

Two-state solution

The US position appears to be evolving, though, with US politicians hinting that talks could be possible.

Senator John McCain, a Republican, said he supported his government's reaction to the Hamas victory, but suggested talks would be possible of the organisation accepted the state of Israel.

This view was echoed by Afghan President Hamid Karzai.

We now have go find a way to communicate without talking, before we also make decisions for the long range
Itamar Rabinovich
President, Tel Aviv University
He called on Hamas to change its stance because "statements not accepting Israel, demanding the extinction of Israel, do not help the Palestinian people - do not help the peace process".

In return, once Hamas had changed, both Israel and the United States should be prepared to talk.

He said Israel had every right to exist as a state and nation, just as the Palestinians had the right to a sovereign state.

Mr Karzai said Afghanistan would establish diplomatic relations with Israel as soon as a Palestinian state had come into being.

'Communicate without talking'

Israelis in Davos greeted the news of the Hamas victory with concern and trepidation.

"This is a bad development," said Itamar Rabinovich, president of Tel Aviv University.

"We now have go find a way to communicate without talking, before we also make decisions for the long range."

In the meantime, there will be pressure on Hamas "to modernise and be democratic", said Hajim Alhasani, president of the Iraqi National Assembly.

Several of the participants warned that Hamas might have very little time for change.

They described the Palestinian economy as highly fragile.

Former World Bank president James Wolfensohn warned that the Palestinian government was close to bankruptcy, and warned of "chaos" should the money run out to pay employees of the Palestinian Authority.

Joseph Bachar, the director general of the Israeli ministry of finance, said Israelis and Palestinians would have to co-operate one way or another, for the simple fact that the Palestinian economy was heavily dependent on the Israeli economy.

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